The reason he cuts a good price for cash is two fold. First, there is a charge per transaction and a fee that the retailer pays to the credit card company. It can be 1% to 3%. I usually try to pay with my USAA Mastercard which has a lower rate. I leave my Discover card for Home Depot and Lowes, cause it has a higher rate. The second problem with credit cards is that the retailer doesn't get the cash transfered to him right away, and the person can file a dispute with the credit card company that the retailer may have to deal with, and potentially not get money at all. My dad's golf shop was victim of this quite a bit, and I imagine aquarium and livestock is worse. He'd cut a great deal on a set up clubs and the guy would whip out his American Express card (used to be the worst, but not sure anymore), so his 10% margin would turn to 7% just like that. Also, he'd have folks use some clubs for the weekend and not hit the ball any better, and want to return them. Of course he couldn't take them back, so they'd file a claim with the credit card company. Not sure my dad lost any money, but I know completing and faxing those dispute forms was a pain in the arse.
- Rayk